NEAR THE CLOSE NOTES
What we simply do on a daily basis is look through photo albums for familiar faces…that being the fear and greed patterns of price being traced out.
Just letting you know the recent rally back up after the nauseating drop is starting to look like nothing more than a violent, oversold wedge to the upside and needs to be watched. Anything is possible with the continued central bank-induced markets but patterns play out. There are many areas already in very poor shape…even with the rally. There are many areas that are hitting a wall in and around the 50 day moving average…with other areas initially moving above and then dropping below.
Stay tuned. At the very least, this is a tougher proposition on a daily basis. Will get more specific tonight or tomorrow morning.
PRE MARKET
We like having a great edge. But there are not great edges all the time. Right now, it is a lot of a guessing game. Yesterday, big sell off after two big days up after a bunch of ugly reversal days…into this morning’s “another gap to the upside!”
So be patient. That is best advice.
But:
Continue to avoid (except for bounces) everything interest-rate sensitive…real estate, utilities, housing. If rates come down again, they will rally from voersold.
Consumer staples act horrid. (Food, drug, beverage, tobacco, household products.)
Europe continues to under-perform.
Chinese ADRs now need to be watched as they are under some pressure.
The good news is the “glamour growth,” mega-cap tech/internet continue to act well but is getting narrower. BKNG (used to be PCLN) gapping nicely to the upside to near old highs…another glamour name that has been dead.
FINANCIALS are also in fine shape. SEMIS were amazingly in new high ground yesterday. NASDAQ/NDX hit near old highs and pulled back. That’s a no biggie. Just have to be a lot more sector and stock specific from here on in.
PRE MARKET
Another strong day. At this juncture, our writing becomes less is more until things change. NASDAQ/NDX almost at old highs…which amazes and at the same time, doesn’t. We have seen wild swings for quite a while in the market.
We would love to see a settling down as we move into meat of resistance. It would set things up better for potentially higher prices.
New fedhead speaks today but nothing changing. Will continue to have ridiculous easy monetary policy with Europe and JJapan still printing and have negative rates.
PRE MARKET
Gee…another decent sized gap to the upside! Rates are also coming down after they teased the 3% level. We will leave it at that for this morning. Most gains have been coming pre-market. Not the easiest proposition.
WEEKEND NOTES
Intermediate-term corrections usually have major indices drop 10-15% and usually last a good 12 weeks. We just saw one that lasted 10 days. Blame it on algos. Blame it on button pushers. Blame it on the horrible Knicks season. We just think the “A LOW” we called on February 9th, has turned into one hell of a low and as more cards have come out of the deck, odds keep getting higher that it was THE low.
The interesting thing about last week is that markets were not up that much but ended on a very high note. Normally, when you see a couple of horrid reversals to the downside, there is follow through to the downside. Instead, we get Friday’s big action.
As markets move higher, they now enter the meat of resistance. We suspect some resistance will come into play but must say markets have been working through resistance nicely. We are watching several areas in particular. FINANCIALS were never hit hard on the way down and are back above resistance with some at highs.
MEGA-CAP glamour names, for the most part, have reasserted themselves nicely. We believe they will give a huge signal to the markets. If they crap out, look out but so far, so very good.
The BOND MARKET is about as oversold as we have seen in a while. The 10 year never penetrated 3%. Many have been saying a move through that level will be bearish for markets. We are not so sure of that but we know interest rates matter.
This coming week will be important as a few of the major indices are now above the 50 day with the NASDAQ/NDX the strongest.
